4 Things Organizations Get Wrong About Office 365 Licensing

4 Things Organizations Get Wrong About Office 365 Licensing

Arraya Insights | September 3, 2020

4 Things Organizations Get Wrong About Office 365 Licensing

The more the merrier can be said of a lot of things, but Office 365 licenses aren’t necessarily one of them. Yet, that’s exactly how many organizations, intentionally or not, seem to be approaching the subject. The result of this is a license portfolio that is frequently, radically out of step with organizational need as well as budget.

A pair of studies explored this phenomenon recently and both landed on the exact same conclusion: Organizations are doing themselves a disservice by not taking a closer look at how they handle licenses. Some of the more eye-catching (and troubling) discoveries include:

  • Researchers from Quadrotech found roughly 18% of Office 365 licenses are going unused. The company then extrapolated that out, using the average cost of a Microsoft E3 license and a base setting of a 10,000 seat organization, to estimate an average license overspend of $150k.   
  • A separate investigation from CoreView painted an even bleaker picture. Its analysts found 56% of Office licenses are, “inactive, underutilized, oversized, or unassigned.” In their estimation, organizations are spending 14% more on Office 365 licenses than is necessary.

So how did we get to the point depicted in each of these studies? Where are organizations going wrong with licensing and, more importantly, what can be done to get them back on the right track and bring those costs down?

Costly, but correctable, Office 365 licensing mistakes

Here are four mistakes that lead to license overspend:

  • Not auditing licensing (or not doing so regularly). You can’t improve what you aren’t measuring. It’s become a cliché for a reason. When it comes to licensing, too many organizations just layer on new licenses without first looking at what they have and what they need. On the flip side of this issue, organizations may also continue to pay for licenses they once used but now don’t. Routine audits can bring each of these items into focus.
  • Stockpiling licenses for a rainy day. Organizations don’t want to get caught shorthanded so they order more licenses than they need. They don’t end up needing those licenses and, over time, they’re forgotten about – but the budget doesn’t forget. Rather than carrying extra licenses on the books, organizations would be better served by right-sizing their portfolio using the data generated by those routine audits. This can help organizations predict periods where they may require more licenses and plan accordingly. In the event of surprise spikes, like the one that took place earlier this year, it helps to have a partner that can work with Microsoft to make on the fly changes.
  • Buying new licenses instead of recycling old ones. Those gently-used Office 365 licenses? They’re just as good as the new ones. Still, the first step for some organizations when they find themselves in need of licenses is to buy more. They do this even though they often have perfectly good licenses going unused in-house. Instead of buying new, organizations should repurpose and reassign the licenses they already have, for example those from employees who were either terminated or who resigned.
  • Overinvesting in top of the line licensing. Everyone wants the best, highest tier of licensing. What they actually need is a different story. Let’s look at Microsoft’s E5 licensing, its top tier. This includes all of the core Office apps, cloud calling, audio conferencing, Power BI Pro and a lot more. It’s the highest tier for a reason. It’s unlikely every user needs access to all of those features. The same basic idea also applies to E3 licensing. Back to the idea of audits, organizations should also be auditing how their licenses are used. If a user has access to dozens of features he or she isn’t using, it’s likely safe to slide him or her down a tier (or more), cutting costs in the process.          

Next Steps: Right-size your Office 365 license footprint (and spend)

Need help reviewing or right-sizing your Office 365 licensing? Arraya Solutions can help. During our completely free licensing assessment, our experts will work with your team to audit your existing portfolio and help you pivot as necessary to better meet your organization’s needs and requirements. Reach out to us today to start a conversation!

Visit https://www.arrayasolutions.com/contact-us/ to connect with our team now.

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